Question

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves and are on the same point on each curve. If Beta then devotes more resources to investment goods than consumer goods when compared to Alpha, then in the future:A)Alpha will experience greater economic growth than Beta.B)Alpha will not be able to achieve full employment or productive efficiency.C)Beta will experience greater economic growth than Alpha.D)Beta will not be able to achieve full employment or productive efficiency

Answer 1

Answer: A) Alpha will experience greater economic growth than Beta.

Explanation:

The production possibility curve shows how the effective and efficient use of the resources that are available in an economy can bring about the maximization of the production of two goods.

Since both economies Alpha and Beta have same production possibilities curves and are also on the same point on each curve, in a scenario whereby Beta devotes more resources to investment goods than consumer goods when compared to Alpha, then in the future Alpha will experience greater economic growth than Beta.